Nightshade Sharding Phase 1 Launches— the Next Alpha is NEAR
By MetaWeb Ventures, CornerstoneDAO & LiNEAR Protocol
Scalability has always been the biggest challenge to mainstream adoption of blockchain technology. NEAR Protocol was founded in 2018 to tackle this challenge with a very innovative sharding mechanism: Nightshade. Sharding is a way of partitioning a database into smaller pieces (or ‘shards’), splitting the work of processing transactions across many participating nodes in parallel. Nightshade Sharding allows NEAR Protocol to scale linearly with the number of shards, thereby having the ability to handle millions of transactions per second and satisfy the demand for transactions as more and more users start to use NEAR.
Ultimately it prepares NEAR for mass consumer adoption of billions of users.
NEAR’s Nightshade Sharding Roadmap
The roll-out of Nightshade Sharding is divided into a four-stage rollout process, starting from Phase 0: Simple Nightshade, which was successfully launched on the mainnet on November 15, 2021. In this initial phase, NEAR Protocol shards the state, but not processing — meaning the blockchain will still be validated by all the network’s validators. The network is split into four shards, significantly increasing the throughput of NEAR.
In the upcoming Phase 1, Chunk-Only Producers will be introduced. Chunk-Only Producers are solely responsible for producing chunks (parts of the block from a shard, see Nightshade for more detail) in one shard (a partition on the network), and thus require less sophisticated, more affordable hardware. The current plan is to onboard 250–400 Chunk-Only Producers. With a low barrier to entry, NEAR can have a large set of Chunk-Only Producers and increase the total number of validators on the network, thereby increasing the decentralization of the network and improving its security. Phase 1 is expected to launch in mid to late September 2022.
The next step of the roll-out is Phase 2: Nightshade, which will complete the implementation of challenges, thereby eliminating the need for any validators to track all the shards. Once this step is completed, both state and processing will be fully sharded, further lowering the hardware requirements of running a block producer on NEAR, making the network more accessible for validators. Phase 2 is expected to be released in 2023
In Phase 3: Dynamic Resharding, the network will be dynamically split into shards and then merged based on resource utilization. This will enable NEAR to expand almost infinitely. Phase 3 is expected to be released in 2023 as well.
The Impact of Nightshade Sharding Phase 1 Launch
Much lower barrier of entry to become a validator
Since Chunk-Only Producers are only responsible for a part of the block from a shard, they can operate with much more affordable hardware, such as a machine with ore CPU, with 8GB of RAM, and 200 GB SSD of storage, compared to a machine with 8-core GPU, 16GB RAM and 1TB SSD storage required in Phase 0.
Further enhancing decentralization and security
There are currently 100 validators on NEAR’s mainnet. With the introduction of Chunk-Only Producers, we expect NEAR to onboard an additional 200 to 400 validators. Pagoda, Linear and other ecosystem developers of NEAR are hosting the incentivized testnet Stake Wars to better prepare more developers for the upcoming phase 1 launch. With more nodes soon to be added, the security of NEAR’s mainnet will reach an unprecedented level.
Reducing liquidity across exchanges and boosting market confidence
As more and more nodes start to validate NEAR’s mainnet, an increasing number of tokens are likely to be staked to these nodes. This results in a lower amount of liquidity across exchanges over time while creating more demand for the NEAR tokens, which could lead to an increase in NEAR’s token price.
Accelerating Ecosystem Growth with Robust Scaling Technology
Thanks to NEAR’s faster finality, cheaper transaction fees, and developer friendliness, NEAR is well-positioned to onboard more developers and projects to accelerate the growth of its ecosystem.
NEAR’s Nightshade vs Ethereum’s Sharding Technology
As Ethereum’s Merge is getting closer, lots of people are starting to compare NEAR and Ethereum’s sharding technology. “NEAR seems like the Ethereum 2 roadmap implemented,” angel investor and co-founder of Angelist, Naval Ravikant said.
To be specific, Ethereum shards a single blockchain into several generally independent “shard chains”, where NEAR shards within each block and maintains a single blockchain.
(Left) Ethereum’s Sharding Design and (right) NEAR’s Nightshade Sharding Design
NEAR’s sharding mechanism comes with two competitive advantages.
- Faster finality for cross-shard transactions
The core of Ethereum 2.0’s sharding design revolves around a beacon chain, the sole purpose of which is to coordinate cross shard transactions. But since each cross-shard transaction needs to be confirmed by the beacon chain, transaction finality could take from 15 seconds to even a few minutes in some cases. On the other hand, since the beacon chain cannot be further sharded, the network’s scalability is capped by the upper threshold of the beacon chain’s processing capability.
In contrast, NEAR Protocol shards within each block, which results in a 1 to 2 second finality for a cross-shard transaction, significantly improving the user experience. Since Nightshade Sharding does not rely on the beacon chain design, NEAR’s scalability is theoretically limitless.
2. Enabling Asynchronous (Cross-shard) Composability
Since DeFi 1.0, many have realized the importance of blockchain composability — the general ability of components of a system to be recombined into larger structures and for the output of one to be the input of another. In simple terms, the best example is Lego, where every piece can connect to every other piece. Unlike in Web2, many blockchain developers can freely use and integrate code from other applications into their products, reducing time to deploy a Web3 application.
The implications of composability are mind-blowing: it is already possible for DAO token holders to vote on Snapshot and use Zodiac Reality to trigger a transaction from the DAO’s treasury to take a $DAI loan from MakerDAO, pool the $DAI on Curve, then deposit the resulting LP tokens into Convex to earn trading fees plus $CRV and $CVX tokens.
Sharding, fundamentally speaking, is a type of asynchronous scaling technology. Asynchronous scaling is often viewed as the only sustainable mechanism to solve the infamous blockchain trilemma — it is not dependent on Moore’s Law or hardware improvement to scale, nor does it sacrifice the underlying security premises of crypto. As a result, async scaling is core to many other public chains such as Polkadot and Cosmos. However, whether in the case of Ethereum’s shard charin, or Polkadot/Cosmos’ appchain, a cross-shard transaction is essentially an internal “cross-chain” transaction, which greatly sacrifices the composability between DApps and smart contracts. NEAR’s Nightshade Sharding, on the other hand, despite its asynchronous nature, can still enable cross shard composability, staying true to the core value of blockchain and Web3.
NEAR: Create without Limits
NEAR’s vision has always been to build the bridge that connects the internet user of today to the blockchain based web of the future. NEAR aims to make blockchain easy to use for both users and developers.
Aurora and Rainbow Bridge
For developers, NEAR offers great crosschain interoperability throughout Aurora, enabling a large amount of existing crypto users and developers to enjoy the scalability of NEAR.
Aurora is an Ethereum Virtual Machine (EVM) built on NEAR, providing a solution for developers to deploy their apps on an Ethereum-compatible, high-throughput, scalable and future-safe platform, with low transaction costs for their users. Rainbow Bridge, on the other hand, is a robust, permissionless bridge that allows assets to be transferred between different chains, such as NEAR, Aurora, Ethereum, and more.
Aurora is backed by top VCs such as Pantera Capital, Electric Capital, Dragonfly Capital, Three Arrows Capital, and Alameda Research.
Although Rust and Solidity are the most prominent programming languages for Layer 1 blockchains, there are fewer than 2.5 million developers worldwide who use these languages. So, opening up the doors nearly 10x is a major step towards mass adoption. JS runs in every browser, the basics can be taught in an afternoon, it requires no compiler setup, and it comes pre-loaded with useful libraries like RegExp, Math, and Array. The NEAR JS SDK brings this same capability and ease of use to developing smart contracts, unlocking the power of blockchain to a much, much wider audience.
Octopus Network: Substrate based Appchain Scaling Network
Octopus Network, similar to Polkadot and Cosmos, is a network for building application specific chains. Octopus is designed to run a large number of Web3.0 applications in the form of independent blockchains (aka application chain) safely and efficiently on top of NEAR Protocol.
Octopus Network is a development environment based on Substrate, which allows existing Polkadot users and developers to quickly migrate to NEAR, just as Aurora brings in EVM users and liquidity. Due to Octopus’ unique design and the scalability of NEAR as a base chain, Octopus Network has greatly improved the performance of Substrate based app chains.
Octopus is backed by NEAR Foundation, Electric Capital, DCG, NGC, Continue Capital, Sevenx and more.
Calimero: Private Shard
Calimero gives enterprises the ability to build private shards that can still be connected to the public blockchain. For example, a hospital housed its records on a private shard, but a patient gets sick overseas and a doctor needs access to his or her records. On Calimero, a doctor — whose identity could be publicly verifiable — could make a request to the private shard for access to those files simply, and securely.
Private Shards is a core part of NEAR’s mission of enabling mainstream adoption of NEAR. It helps create an ecosystem where businesses, users, and partners can interact to create a more open, and inclusive web.
Sweatcoin: Bringing 100M Users to Web3
Sweatcoin is an app that rewards user’s daily steps with a new-generation currency that users can spend on cool products, donate to charity or convert into SWEAT. Sweatcoin currently has over 100 million users and is still growing fast. By building the token on top of NEAR’s super-fast, incredibly secure, and infinitely scalable blockchain, SWEAT will be a unique showcase of a blockchain working at scale without fuss.
Sweatcoin has recently raised over $20 million in funding backed by high-profile blockchain investors, such as Electric Capital, Spartan Capital, Jump and GSR.
Niche: Reinventing Social Network
Niche is reinventing social media by distributing ownership of your networks to its members. Rather than traditional social media that uses your content to sell targeted ads, Niche Clubs reward engagement and content creation with token ownership. Each club has its own unique tokens that accrue real value over time and can be used for commerce, event admission, and membership status. The token can be exchanged for real currency. That means your networks are now part of your net worth. Niche fulfills the web3 promise of decentralized ownership and reinvents social media along with it.
Niche is built by a stellar team of entrepreneurs; Chris was the co-founder, CCO, and patented co-inventor of “the swipe” feature for Tinder and CPO of Bumble. Zaven was a senior engineering manager at Facebook, who created and led many significant projects like Facebook fundraisers and initiatives promoting election engagement and fighting misinformation.
Niche has completed a $1.8 million pre-seed round of funding led by MetaWeb Ventures.
Orderly: The next generation DEX on NEAR
A permissionless, modular, and orderbook-based protocol that brings high throughput, low latency, low fees, tight spreads and composability for DeFi builders. Orderly was originally co designed by NEAR’s founder Illia and the Woo’s leadership team. Orderly aims to offer CEX-like performance and depth, with an innovative community pool design. Orderly, as an infrastructure, also aims to empower other apps on NEAR, such as derivative dex, AMM based dex, lending protocols, and more.
Orderly raised a total of $20m USD from Pantera Capital, Dragonfly Capital, Sequoia China, Jump Crypto, Alameda Research, GSR, MetaWeb, as well as a group of strategic partners.
Cornerstone: the Ultimate Meta-governance Protocol
Cornerstone is an infrastructure layer that functions as both an ecosystem index fund and a metagovernance hub of NEAR and Aurora. It accrues mainstream assets, such as NEAR, Aurora and USN, as well as the governance tokens of top Dapp protocols in its treasury. Cornerstone enables its users to govern and capture value across the entire ecosystem with just one token, $CORN, simplifying the onchain experience for users.
Built by core contributors of NEAR Protocol, with advisors such as Illia Polosukhin (founder of NEAR), Alex Shevchenko (founder of Aurora), Louis Liu (founder of Octopus), Amos Zhang (founder of MetaWeb), Kendall Cole (founder of Proximity Labs), Evgeny Kuzyakov (core engineer of NEAR and ICPC Gold Medalist), and Matt Lockyer (invetor of ERC-998). Cornerstone aims to become the metagovernance hub of NEAR, partnering with Aurora, Orderly, Octopus Network and more.
NEAR-based NFT Made a Hit at Taobao Maker Festival
In the summer of 2021, Taobao Maker Festival debuted their first and only public chain based NFT collection: Too Rich City, created by artist Huang Heshan. NEAR Protocol was chosen as the public chain to launch this collection due to its easy to user experience which allows users to seamlessly purchase and own an NFT. The entire collection was sold on the first day.
Disclaimer: This article is for informational purposes only and should not be used as legal, tax, investment, financial or any other advice.
About Metaweb Ventures
Metaweb Ventures is a global venture capital firm focused on pre-seed and seed investments in crypto start-ups. The Fund has been operating in stealth mode over the past few months and has already invested in 33 start-ups. Most notably, MetaWeb invested in Orderly, Niche, CornerstoneDAO, Sender Wallet, Kino, and Play3.
Cornerstone is an infrastructure layer that functions as both an ecosystem index fund and a metagovernance hub of NEAR and Aurora. It accrues mainstream assets, such as NEAR, Aurora and USN, as well as the governance tokens of top Dapp protocols in its treasury, partnering with 25+ protocols. Cornerstone enables its users to govern and capture value across the entire ecosystem with just one token, $CORN, simplifying the onchain experience for users.
LiNEAR Protocol is the most secure liquid staking solution built on NEAR. LiNEAR unlocks liquidity of the staked NEAR by creating a staking derivative to be engaged with various DeFi protocols on NEAR and Aurora, while also enjoying over 10% APY staking rewards of the underlying base tokens. As a Cornerstone-incubated project, LiNEAR will adopt $CORN as its governance token and its native token $LiNEAR will be fully captured by the Cornerstone treasury.